The onset of the COVID-19 pandemic, coupled with diverse business hurdles, has presented substantial barriers for SMEs, resulting in disruptions to their operations. Issues such as limited adaptability, ineffective communication, deficient teamwork, and inadequate digital skills significantly impeded the competitiveness of Nigerian SMEs, especially at the peak of the pandemic. These enterprises often encounter challenges in fostering innovative capacities to address various obstacles. The pandemic underscored the resilience of only those SMEs that embraced innovative strategies, demonstrating their ability to withstand its effects. This study examined the moderating effect of innovation capability on strategic improvisation and performance of selected small and medium-scale enterprises in Lagos State, Nigeria. The study adopted a survey research design. The population study comprised the Small and Medium Enterprises (SMEs) that are registered and operational in Lagos State and identified as members of the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN). The total population of the study was estimated at 42,067, which represents the overall count of registered SMEs affiliated with Small and Medium Enterprises Development Agency of Nigeria (SMEDAN). A sample size of 510 participants was obtained using Cochran’s sample size formula (1977). The study utilized moderated linear regression analysis. The study found that innovation capability (R = 0.719, R2 = 0.517, R2 ? = 0.000, AdjR2 = 0.513, F ? = 0.247, F ?p = 0.620 > 0.05) did not exhibit a significant moderating effect on the relationship between strategic improvisation and performance metrics (R = 0.723, R2 = 0.523, R2 ? = 0.000, AdjR2 = 0.518, F ? = 0.072, F ?p = 0.789 > 0.05). The study concludes that strategic improvisation has no significant effect on organizational performance when moderated by innovative capability. This implies that even if a company demonstrates the ability to improvise strategically, it may not necessarily translate into improved organizational performance, particularly if the organization lacks innovative capabilities. Therefore, the study recommends that SMEs in Lagos should focus on fostering innovation independently. Create innovation hubs within the organization to encourage idea generation and experimentation. Collaboration with local universities or innovation hubs could offer access to research and development opportunities unique to the Lagos context.
Innovation Capability, Strategic Improvisation, Organizational Performance, Small and Medium-Scale Enterprises
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